Analytical thinking training

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  • 1. A Course on Analytical Thinking
  • 2. Course Outline I. Overall Process II. Defining the Problem III. Formulating the Hypothesis IV. Collecting the Facts V. Conducting the Analysis VI. Developing the Solution 2 of 58
  • 3. Course Objectives• Provide a fundamental understanding of how analytical thinking works• Identify specific tools and techniques that consultants can use during the problem solving life cycle• Give consultants a complete framework for managing project issues – from identification to resolution 3 of 58
  • 4. At the end of this session, participants should be ableto….• Understand the systematic process of problem solving• Define the issue as a starting point for your project• Focus on the “drivers” behind your issue• Know how to apply specific techniques, such as brainstorming, root cause analysis, and SWOT• Know how to test your proposed solutions before submission to the client• Know how to present viable solutions for solving critical problems 4 of 58
  • 5. OVERALL PROCESS
  • 6. Analytical Thinking follows the scientificapproach to problem solving Problem Solution Hypothesis Analysis Facts 6 of 58
  • 7. Defining the Problem Solution Problem Hypothesis Analysis FactsDefinition:• A problem is a situation that is judged as something that needs to be corrected – implies that a state of "wholeness" does not existImportance:• It is our job to make sure we’re solving the right problem – it may not be the one presented to us by the client. What do we really need to solve?Basic Concepts:• Most of the problems are initially identified by our clients• Defining the problem clearly improves focus – it drives the analytical process• Getting to a clearly defined problem is often discovery driven – Start with a conceptual definition and through analysis (root cause, impact analysis, etc.) you shape and redefine the problem in terms of issues 7 of 58
  • 8. Formulating the Hypotheses Solution Problem Hypothesis Analysis FactsDefinition:• Hypothesis is a tentative explanation for an observation that can be tested (i.e. proved or disproved) by further investigationImportance:• Start at the end - Figuring out the solution to the problem, i.e. "hypothesizing", before you start will help build a roadmap for approaching the problemBasic Concepts:• Hypotheses can be expressed as possible root causes of the problem• Breaking down the problem into key drivers (root causes) can help formulate hypotheses 8 of 58
  • 9. Collecting the Facts Solution Problem Hypothesis Analysis FactsDefinition:• Meaningful information (has merit – not false) that is qualitative (expert opinions) or quantitative (measurable performance) to your decisionsImportance:• Gathering relevant data and information is a critical step in supporting the analyses required for proving or disproving the hypothesesBasic Concepts:• Know where to dig• Know how to filter through information• Know how to verify – Has happened in the past• Know how to apply – Relates to what you are trying to solve 9 of 58
  • 10. Conducting the Analysis Solution Problem Hypothesis Analysis FactsDefinition:• The deliberate process of breaking a problem down through the application of knowledge and various analytical techniquesImportance:• Analysis of the facts is required to prove or disprove the hypotheses• Analysis provides an understanding of issues and drivers behind the problemBasic Concepts:• It is generally better to spend more time analyzing the data and information as opposed to collecting them. The goal is to find the “golden nuggets” that quickly confirm or deny a hypothesis• Root cause analysis, storyboarding, and force field analysis are some of many analytical techniques that can applied 10 of 58
  • 11. Developing the Solution Solution Problem Hypothesis Analysis FactsDefinition:• Solutions are the final recommendations presented to our clients based on the outcomes of the hypothesis testingImportance:• Solutions are what our clients pay us for…Basic Concepts:• It is important to ensure the solution fits the client – solutions are useless if they cannot be implemented• Running an actual example through the solution is an effective way of testing the effectiveness and viability of the solution 11 of 58
  • 12. TOOLS AND TECHNIQUES FOR"DEFINING THE PROBLEM"
  • 13. Problem Identification• A problem becomes known when a person observes a discrepancy between the way things are and the way things ought to be. Problems can be identified through: – Comparative/benchmarking studies – Performance reporting - assessment of current performance against goals and objectives – SWOT Analysis – assessment of strengths, weaknesses, opportunities, and threats – Complaints – Surveys – Etc. 13 of 58
  • 14. Getting to the "Root" of the Problem• Sometimes the thing we think is a problem is not the real problem, so to get at the real problem, probing is necessary• Root Cause Analysis is an effective method of probing – it helps identify what, how, and why something happened• Definition of root cause: – Specific underlying cause – Those that can reasonably be identified – Those that management has control to fix 14 of 58
  • 15. Root Cause Analysis Technique - Five Why’s Five Whys refers to the practice of asking, five times, why the problem exists in order to get to the root cause of the problem Employee turnover rate has Why? Why? Why? Why? Why? beenincreasing Employees are Employees are not Employees feel Other employers Demand for such leaving for other satisfied that they are are paying higher employees has jobs underpaid salaries increased in the market 15 of 58
  • 16. Root Cause Analysis Technique – Fishbone Diagram Fishbone Diagram (a.k.a. Cause and Effect Diagram) is an analysis tool that provides a systematic way of looking at effects and the causes that create or contribute to those effects. Cause Cause Detail Detail Result (Problem) Detail Detail Cause Cause The value of the Fishbone Diagram is that it provides a method for categorizing the many potential causes of problems or issues in an orderly way and in identifying root causes 16 of 58
  • 17. Other Root Cause Analysis Techniques• Force Field Analysis – Visually show forces that impact your problem or issue• Scatter Diagrams – Graphs the relationship of two variables – quantifies the correlation, showing how one variable influences another• Process Mapping – Maps the “as is” flow of activities that make up a process – look for excessive handoffs, redundancies, and other root causes of inefficiencies• Benchmarking – Compares existing performance to another internal or external source, identifies issues not otherwise revealed through other techniques 17 of 58
  • 18. Basic Questions to Ask in Defining the Problem(regardless of the technique used) Who What Where• Who is causing the problem? • What will happen if this problem • Where does this problem occur?• Who says this is a problem? is not solved? • Where does this problem have• Who are impacted by this • What are the symptoms? an impact? problem? • What are the impacts? • Etc.• Etc. • Etc. When Why How• When does this problem occur? • Why is this problem occurring? • How should the process or• When did this problem first start • Why? system work? occurring? • Why? • How are people currently• Etc. • handling the problem? Etc. • Etc. 18 of 58
  • 19. TOOLS AND TECHNIQUES FOR"FORMULATING THE HYPOTHESES"
  • 20. Issue Diagram is an effective method for breakingdown problems and formulating hypotheses Hypothesis #1A Hypothesis #1A Key Questions #1C-a Key Questions #1C-a Hypothesis #1B Hypothesis #1B Issue #1 Issue #1 Key Questions #1C-b Key Questions #1C-b Hypothesis #1C Hypothesis #1C Key Questions #1C-c Key Questions #1C-c Hypothesis #1D Hypothesis #1D Key Questions #1C-d Key Questions #1C-d Problem Problem Issue #2 Issue #2 Issue #3 Issue #3 20 of 58
  • 21. Key Components of Issue Diagram Questions which need to be answered or Issues topics which need to be explored in order to solve a problem Speculative answers for issues that are Hypotheses phrased as questions and/or areas of exploration for issue phrased as topics Questions that probe hypotheses and Key Questions drive the primary research required to solve the problem 21 of 58
  • 22. Identifying the Issues What key topics should we explore to help the client solve this problem?Client wants to decide whether they should divest their widget X Is there a market for Issue #1 Issue #1 divesting this business? manufacturing business Is this a cost effective Problem Problem Issue #2 Issue #2 solution for the client? What impacts will there be Issue #3 Issue #3 for the displaced employees? 22 of 58
  • 23. Key to Identifying Issues1. Develop a comprehensive list of all possible issues related to the problem2. Reduce the comprehensive list by eliminating duplicates and combining overlapping issues3. Using consensus building, get down to a “major issues list” (usually two to five issues) 23 of 58
  • 24. Formulating the Hypotheses Hypothesis #1A Hypothesis #1A The market is large. Market Interest? Issue #1 Issue #1 Hypothesis #1B Hypothesis #1B Etc. Etc.Divest Widget X Cost Hypothesis #2A Hypothesis #2A Business? Effectiveness? What are some possible answers to Problem Problem Issue #2 Issue #2 Hypothesis #2B Hypothesis #2B the issues? Etc. Etc. Impacts on Hypothesis #3A Hypothesis #3A Large percentage of Employees? employees will likely retire Issue #3 Issue #3 Hypothesis #3B Hypothesis #3B in two years. Etc. Etc. 24 of 58
  • 25. Framing the Key Questions How many players Key Question #1A-a Key Question #1A-a are there in the The market is large. market? Market Interest? Hypothesis #1A Hypothesis #1A Key Question #1A-b Key Question #1A-b Issue #1 Issue #1 How many are Hypothesis #1B Key Question #1A-c large enough to Hypothesis #1B Key Question #1A-c take on the clients business?Divest Widget X Business? Cost Effectiveness? Hypothesis #2A Hypothesis #2A Problem Issue #2 What questions need to be Problem Issue #2 answered to prove/disprove Hypothesis #2B Hypothesis #2B the hypothesis? Large percentage of employees will likely retire Key Question #3A-a Key Question #3A-a Impacts on in two years. Employees? How many Hypothesis #3A Hypothesis #3A Key Question #3A-b Key Question #3A-b employees are 50 Issue #3 years old or older Issue #3 and interested in Hypothesis #3B Hypothesis #3B Key Question #3A-c retiring? Key Question #3A-c 25 of 58
  • 26. Common Pitfalls in Creating Issue Diagram Issues which are: • Too broad, which expand beyond the objectives • Too narrow Issues • Too many to be easily remembered • Of uneven weight • Not sequenced effectively Hypotheses which are: • Too few to cover the issue • Too many to be easily remembered Hypotheses • Not supportable by data • Not directly relevant to the issue Key questions which are: • Too few to test the hypotheses Key Questions • Too many to be easily remembered • Irrelevant to the hypotheses • Not answerable with data 26 of 58
  • 27. Key Messages• Issue diagrams provide a framework for brainstorming and documenting the issues driving the problem and identifying the facts (i.e. data) required to support conclusions and recommended solutions• Hypotheses and the key questions will help shape data collection requirements and ensure that only relevant data is collected• Formulation of hypotheses and key questions is an evolving process – they will need to be revised as new insights and discoveries are made 27 of 58
  • 28. Brainstorming – A Method for Identifying Issues andFormulating Hypotheses• Brainstorming is useful when there is a wide range of possible issues and solutions• Brainstorming is not appropriate for testing an idea; it is used to generate ideas• There are numerous brainstorming techniques, which include group brainstorming, individual brainstorming, and storyboarding• Individual brainstorming is usually not recommended unless time is too tight, participants are rarely available, group is too large, etc.• Brainstorming can be useful for Force Field Analysis – identifying all forces impacting the problem 28 of 58
  • 29. Tips for Brainstorming1. State the purpose and objective of the brainstorming session from the onset2. Set ground rules for participants3. Give everyone an opportunity to participate4. Solicit all ideas and opinions – nothing is rejected until consensus building takes place5. After exhausting all ideas, eliminate certain ideas, e.g. not relevant, duplicative, etc.6. Finalize outcome of the brainstorming process through consensus: Highest Priority, Assigning Points, etc. 29 of 58
  • 30. TOOLS AND TECHNIQUES FOR"COLLECTING THE FACTS"
  • 31. Getting to the Facts• In order to answer the key questions and validate the hypotheses (presented in the earlier steps), collection of factual information is necessary• First critical steps are to identify what information, i.e. data elements, is required and develop a data collection approach/technique• Depending on the type of problem being solved, different data-collection techniques may be used• Combining a number of different techniques allows looking at problems from different perspectives• Data collection is a critical stage in problem solving - if it is superficial, biased or incomplete, data analysis will be difficult 31 of 58
  • 32. Using the Issue Diagram to identify data and information needs • Number of companies in the How many are industry Key Question #1A-a large enough to • Revenues for the Key Question #1A-a take on the clients last 5 years business? • Etc. Issue #1 Hypothesis #1A Hypothesis #1A Key Question #1A-b Key Question #1A-b Issue #1 Hypothesis #1B Hypothesis #1B What information or dataProblem Issue #2 Hypothesis #2A Hypothesis #2A Key Question #1A-c Key Question #1A-c needs to be collected to Problem Issue #2 Hypothesis #2B Hypothesis #2B answer these questions? Key Question #3A-a Key Question #3A-a Hypothesis #3A Hypothesis #3A • Ages of the Issue #3 Issue #3 Hypothesis #3B Hypothesis #3B How many employees Key Question #3A-b employees are 50 • Employee interest Key Question #3A-b level years old or older and interested in • Etc. Key Question #3A-c Key Question #3A-c retiring? 32 of 58
  • 33. Data Collection Techniques Technique Description Tools Using Available Using Available Using data that has already been • Checklist Information collected by others • Data compilation forms Information Systematically selecting, watching and recording behavior and • Eyes and ears Observing Observing characteristics of people, objects or • Data compilation forms events Oral questioning of respondents, • Interview guide Interviewing Interviewing either individually or as a group • Data compilation forms Collecting data based on answers Administering Written Administering Written • Survey provided by respondents in written Questionnaires • Questionnaire Questionnaires form Facilitating free discussions on Conducting Focus Conducting Focus • Flip charts specific topics with selected group Groups Groups of participants 33 of 58
  • 34. Importance of Combining Different Data CollectionTechniques Qualitative Techniques Quantitative Techniques (Flexible) VS. (Less Flexible) • Produce qualitative data that is often • Structured questionnaires designed to recorded in narrative form quantify pre- or post-categorized • Useful in answering the "why", "what", answers to questions and "how" questions • Useful in answering the "how many", • Typically includes: "how often", "how significant", etc. – Loosely structured interviews using questions open-ended questions • Answers to questions can be counted – Focus group discussions and expressed numerically – Observations A skillful use of a combination of qualitative and quantitativetechniques will give a more comprehensive understanding of the topic 34 of 58
  • 35. TOOLS AND TECHNIQUES FOR"CONDUCTING THE ANALYSIS"
  • 36. Conducting the Analysis• The next step in problem solving is to "make sense" of the information collected in the previous step• There is an abundance of analytical techniques that can be applied for understanding:What are the most important issues?What are the most important issues? Pareto Analysis Pareto AnalysisWhat performance areas are weak?What performance areas are weak? Benchmarking BenchmarkingWhat are the core competencies of the client?What are the core competencies of the client? SWOT SWOTWhat forces can influence the problem?What forces can influence the problem? Force Field Analysis Force Field Analysis 36 of 58
  • 37. Specific Sequential Steps that lead up to the Analysis Make sure you know what you are trying to solve – Clearly 1 defined issues or questions drive the analysis! Match up the clearly defined question or issue with the 2 appropriate analytical tool(s) Once you’ve matched up the analytical tools against the 3 question or issue, then go out and collect the facts 37 of 58
  • 38. Apply analytical tools and move back upstream 1. Start with clearly defined issues or questions How many are large 2. Select the Analytical Tool enough to take on the # # of companies in of companies in clients business? industry industry Key Question #1A-a Key Question #1A-a Revenues for last 5 5 Hypothesis #1A Hypothesis #1A Key Question #1A-b Key Question #1A-b Revenues for last Benchmarking Issue #1 Issue #1 years Hypothesis #1B Hypothesis #1B Key Question #1A-c Key Question #1A-c years Hypothesis #2A Hypothesis #2A What analysis needs toProblem Issue #2 Problem Issue #2 Hypothesis #2B Hypothesis #2B be done to answer this question? Hypothesis #3A Hypothesis #3A Key Question #3A-a Key Question #3A-a Age ofof employees Age employees Issue #3 Issue #3 Hypothesis #3B Hypothesis #3B Key Question #3A-b Key Question #3A-b 3. Collect required information per Key Question #3A-c Key Question #3A-c the Analytical Tool selected How many employees Employee interest level Employee interest level are 50 years old or inin retiring retiring older and interested in retiring? 4. Once you complete your analysis, move back upstream to answer the key question you started with 38 of 58
  • 39. Analytical Techniques• Benchmarking – Compare and measure a process or activity against an internal or external source• SWOT Analysis – Assessment of strengths, weaknesses, opportunities, and threats• Force Field Analysis – Overall environmental landscape and how it impacts the subject• Cost Benefit Analysis – Compare total equivalent costs (all the minuses) against equivalent value in benefits (all the pluses)• Impact Analysis – What if type analysis to assess the impact of change on an agency• Pareto Chart – Bar Chart for categorizing issues or other attributes in terms of importance 39 of 58
  • 40. Benchmarking• Measures and compares your performance against other similar activities or processes internally or externally• Differences indicate possible performance issues• May be difficult to collect comparable measurement data• Comparing “best in class” performance is better than comparing average performance• Best sources of data are in the private sector -Hays Benchmarking, Benchmarking Exchange, The Benchmarking Exchange, etc. 40 of 58
  • 41. Benchmarking Example Average Days for Source Selection Air Force . . . . . . . . . . . 75 Days Army . . . . . . . . . . . . . . . 96 Days Navy . . . . . . . . . . . . . . . 116 Days Canadian Army . . . . . . 145 Days 41 of 58
  • 42. SWOT – Strengths Weaknesses OpportunitiesThreats• Identifies Strengths, Weaknesses, Opportunities, and Threats by asking: What things are we good at, what things are we not good at, what things might we do, and what things should we not do?• Probably the most common analytical tool for strategic planning• Somewhat subjective• Easy to understand and follow• Very useful for identifying the core competencies of any organization 42 of 58
  • 43. SWOT ExampleInternal Assessment of the organization, its people, services, competencies, etc. Internal Assessment of the organization, its people, services, competencies, etc. Strengths WeaknessesClient has a global infrastructure to Client has limited resources forservice all types of customers expanding its global reachServices are in high demand in most Key processes are not very cost competitiveparts of the world when compared to other service providersExternal Assessment of direct and indirect forces, social, economic, political, etc.External Assessment of direct and indirect forces, social, economic, political, etc. Opportunities ThreatsUntapped demand exists in almost half Other clients are investing in newerof the World technologiesNew Technologies make it possible to Some clients are entering into strategicexpand service reach partnerships to expand their global footprint 43 of 58
  • 44. Force Field• Visually shows significant forces that impact the problem• Forces tend to be those factors that promote or hinder a solution to a problem• Prioritize forces between direct (more important) and indirect (less important)• May need to brainstorm to generate ideas to list all forces 44 of 58
  • 45. Force Field Example Problem: Agency is not strategically focused Problem: Agency is not strategically focused Positive Forces – Positive Forces – Negative Forces – Negative Forces – Promotes the Solution Promotes the Solution Inhibits the Solution Inhibits the Solution• Defense Department is promoting the • Public Sector mandates lack enforcement Balanced Scorecard teeth – no major urgency to become• Federal Public Sector has mandates such strategically focused. as GPRA • Agency is not resourced to develop• Lower level agencies have balanced strategic plans and execute on non- scorecards in place strategic issues• Strategic planning is growing in • Agency has too many other change importance within the entire public sector initiatives going on Direct – More Important Indirect – Less Important 45 of 58
  • 46. Cost Benefit• Identify all expected costs and benefits to make sure the decision has economic merit.• Costs includes all tangible outlays (time, money, etc.) and intangible /qualitative factors where you can assign some value• Compare using a set of decision criteria – oranges to oranges, apples to apples, etc.• Look at the net changes between making the decision vs. not making the decision• Office of Management and Budget Circular A-94 provides guidelines on how to do cost benefit analysis in the Federal Public Sector. 46 of 58
  • 47. Cost Benefit ExampleChoice A: Proposed Solution -- Design and develop an on-line database systemChoice A: Proposed Solution Design and develop an on-line database system The Costs (minuses) The Benefits (pluses)• Software License Fees • Consistent Reporting• Upgrade network capacity • Reduced Data Entry• Database development time • Much faster turnarounds when• Training of end-users updating master records• Requires regular maintenance • Improved accuracy in reportingChoice B: Do Nothing – Status QuoChoice B: Do Nothing – Status Quo • Software License Fees Net Benefit = Net Benefit = • Maintenance Costs $ 250,000 $ 250,000 • Planned Upgrades Change in Costs Choice A – B = $ 700,000 Change in Costs Choice A – B = $ 700,000 Change in Benefits Choice A – B = $ 950,000 Change in Benefits Choice A – B = $ 950,000 47 of 58
  • 48. Impact Analysis• Identifies broad and diverse effects or outcomes associated with a problem and/or the proposed solution• Answers certain questions: How will this change impact our agency? What are the consequences of not acting on the problem?• Objective is to minimize adverse or negative impacts going forward• Very useful in assessing risk of different proposed solutions – helps you reach the right solution• Numerous tools can be used to assess impacts 48 of 58
  • 49. Impact Analysis Tools• Scenario Playing – Storyboarding out how the future will unfold between alternatives: Do Nothing vs. Solution• Cost Benefit Analysis - Used to quantify impacts• Decision Tree Analysis – Build a tree and assign probabilities to each alternative to arrive at the most likely solution• Simulation – Modeling a process and seeing how it changes when one or more variables change• Prototype Model – Build and test the solution on a small scale before implementation to flush out lessons learned 49 of 58
  • 50. Pareto Analysis• Quantifies what is most important on a graph – 80 / 20 Rule• Puts focus on the significant problems or issues• Must group problems or issues based on a common and measurable attribute (such as reworks, errors, downtime, hours, etc.) = Left Vertical Axis of Bar Chart• Must categorize problems or issues – what type is it? (poor quality, long wait times, etc.) = Right Horizontal Axis of Bar Chart• Plot the data and rank according to frequency – descending order from left to right 50 of 58
  • 51. Pareto Chart Measure# of Employees, etc.Downtime, Errors, Causes, Products, Mfg. Lines, Operators Categories Machines, Defect Types, etc. 51 of 58
  • 52. Key Messages• Don’t rush out and collect information until you know what analytical tools you need to use – each tool has its own information needs• Use a combination of tools to cover all the bases• All decisions involve some assumptions – so you will never have all the facts• Analysis is a discover driven process, it moves incrementally in baby steps – you learn, adjust and go through numerous iterations until you have insights; i.e. you can now take action on the issue or problem 52 of 58
  • 53. TOOLS AND TECHNIQUES FOR"DEVELOPING THE SOLUTION"
  • 54. Basic Concepts• Select and plan the solution that has the greatest impact on solving the problem• Use a solutions rating matrix to weigh different solutions based on selection criteria (costs, probability of success, ease of implementation)• Solutions should have support from your previous analysis that you can clearly communicate to the client• Test your solutions as much as you can – use some of the Impact Analysis Tools 54 of 58
  • 55. Key Messages• 100% out-of-the box solutions don’t exist• No solution is a guarantee – be flexible with implementation and be willing to revisit your requirements• Solutions rarely work unless you get buy-in and commitment from the client – if the client refuses to accept the solution, it will not work!• Be prepared to back up your solution with an implementation plan, complete with milestones to measure performance 55 of 58
  • 56. Common Land Mines that Blow Analytical ThinkingApart• Once a problem is defined, Professional Consultants must have some ability to develop a possible solution. If the Consultant has no control to make recommendations for a problem, then the problem has been defined outside the scope of the project.• The client’s definition of the problem may not be correct. The client may lack the knowledge and experience that Professional Consultants have.• Since most problems are not unique, Professional Consultants may be able to validate the problem and possible solutions against other sources (past projects, other experts, etc.).• The best solutions to a problem are often too difficult for the client to implement. So be careful about recommending the optimal solution to a problem. Most solutions require some degree of compromise for implementation. 56 of 58
  • 57. Summary• Analytical Thinking follows the Scientific Approach• Five Step Process for Consultants: - Define the Problem - Test in the form of Hypothesis - Focus on Facts - Analysis (Various Analytical Tools) - Recommend a Solution 57 of 58
  • 58. Questions and Comments Thanks for your participation! 58 of 58